|Date:||25 April 2017|
|Authors:||Orazio Attanasio , Costas Meghir , Emily Nix and Francesca Salvati|
|Published in:||Review of Economic Dynamics|
|JEL classification:||J24, I15|
In this paper we use high quality data from two developing countries, Ethiopia and Peru, to estimate the production functions of human capital from age 1 to age 15. We characterize the nature of persistence and dynamic complementarities between two components of human capital: health and cognition. We also explore the implications of different functional form assumptions for the production functions. We find that more able and higher income parents invest more, particularly at younger ages when investments have the greatest impacts. These differences in investments by parental income lead to large gaps in inequality by age 8 that persist through age 15.